Is Allergan responsible for Botox counterfeits?

Click on the image to see a gallery of bizarre counterfeit cases around the globe.By Shelley Dubois, reporterJune 9, 2010: 5:17 PM ET

FORTUNE -- Allergan is in a tough spot. It manufactures Botox, the blockbuster cosmetic product that's made with a diluted form of the most potent toxin on the planet. America's favorite
smile-line smoother is safe to use, but a new paper in Scientific American suggests that the global market for the cosmetic treatment could indirectly create an international
security threat -- one that Allergan should help sidestep.

The difference between beauty product and biological weapon is a matter of concentration. The active ingredient in Botox -- botulinum neruotoxin (BoNT) -- blocks the signals that nerve
cells send to muscles, which can paralyze people in high concentrations. If ingested, just one gram could kill over 14,000 people.

The small amount of BoNT in Botox gets rid of wrinkles by temporarily paralyzing the muscles that cause skin to crease. The fear is that because so many people want the anti-aging
treatment, basement biologists will start producing BoNT for Botox knock-offs, especially in the developing world. In the worst-case scenario, some of them could sell the toxin to
terrorists.

When is a threat actually threatening?

The paper's authors want manufacturers and regulatory institutions to work together to monitor the production of pharmaceuticals that use BoNT. They believe that Allergan (AGN, Fortune 500) and the six other legitimate producers of BoNT products should create
an international effort to keep the substance in check.

Both authors are connected to the James Martin Center for Nonproliferation Studies in California. After a two-year long study, they see fake Botox as a serious threat.

"I don't think it's reasonable to expect [Allergan] to be in the law enforcement business," says Ken Coleman, the paper's co-author. "What it owes back to society is to put some kind of
ongoing surveillance effort together that monitors the ongoing threat." He also says that so far, Allergan has been reluctant to do so.

The company isn't legally obligated to do anything. Botox got FDA approval 20 years ago. Since then, the company has pumped out 25 million vials, with a spotless safety record. Allergan
hasn't been connected to any of the rare legal flare-ups with Botox knock-offs in the United States. Two of the main cases in Florida and Arizona involved doctors who tried to cut costs
by injecting patients with a non-FDA approved BoNT products.

Not worth the money

Money isn't a good incentive for Allergan to join an international policing effort, either. The paper's authors argue that legitimate BoNT product manufacturers like Allergan could lose
hundreds of millions of dollars a year in sales to counterfeits. But so far that's proven to be an empty threat -- Allergan still easily controls the majority of the market of BoNT
products.

And Allergan is further protected by being well diversified. It makes a host of other bizarre, high-profile products including a gastric band called Lapband and an eyelash-lengthening
product called Lattisse.

It hasn't been worth Allergan's expense to go after the majority of counterfeiters in court, and it might not be worth it to monitor their development either. Especially if there isn't a
clear connection between fake Botox-like products and terrorism.

"Even though there is a significant amount of demand for the finished medical product, it doesn't actually drive a lot of underlying demand for the toxin itself," says Douglas Ingram,
Allergan's executive vice president and chief ethics officer.

But a link could develop. "The more demand there is for these products, more of these crooks are going to try to get into the market, and it's going to make it more and more attractive
for people to set up production," says Raymond Zalinskas, co-author of the Scientific American paper.

Ingram insists that people generally want real Botox, and in the United States at least, they want the history and safety record that comes with the brand.

Overseas risk

The paper's authors believe the risk is much greater in other parts of the world. Counterfeit BoNT products have already appeared in Russia and China. The authors don't know if
manufacturers leaked something called reagent-grade BoNT, which is only used for research, or if independent counterfeiters brewed the ersatz pharmaceutical. Neither case has been tied to
terrorism.

But even if the toxin hasn't gotten in the wrong hands yet, the potential use of it for nefarious purposes is a real one, says Brad Smith, a senior associate at the Center for Biosecurity
of the University of Pittsburgh Medical Center.

Making weapons-grade BoNT involves growing the bacteria in a fermented liquid, spinning the liquid in a centrifuge to isolate the toxin, then drying the toxic substance into a powder. It
isn't baking cookies, but it wouldn't take much more than a Masters Degree in microbiology to handle the science.

The authors suggest that Allergan and other legitimate companies could help prepare for a weaponized BoNT attack by measuring specific molecular markers in collected counterfeit
pharmaceuticals. Then scientists could take a survey of the kinds of counterfeit Botox products on the market, and trace where they came from. Such an effort would cost less than $1
million per year, says Coleman.

Ingram says Allergan is already keeping an eye on counterfeits. He believes that the company has responded efficiently to incidents in the past, and will continue to do so in the future.
"We are the science leader with respect to Botox and botulinum neurotoxin worldwide, and we take that leadership position very seriously," he says. "That leadership comes with an
obligation to be a voice for reputable science."

*An earlier version of this story said the study authors suggested pharmaceutical companies add molecular markers to their drugs. In fact, the authors advocate measuring
already-present molecular markers.